Economists say we’ve been in a recession for nearly a year now, and for many this has come as no surprise. South Carolina’s economy, not necessarily one of the most robust in the nation, is more susceptible to dramatic effects of the downturn than most.
Case in point… $625 million in budget cuts.
It has taken nearly 7 years for us to recover from the economic punch of the 2001 recession, and now that we’ve barely gotten back on our feet, we’re taking another blow to our economic gut.
Darla Moore drove home this point earlier this week at a meeting of the Upstate chambers of commerce.
In two studies on South Carolina’s tax structure commissioned by the Palmetto Institute the experts noticed, with regard to previous recessions, that South Carolina’s revenue performed worse than the national average in two of the last three recessions since 1980….
To emphasize the point, Sales Tax Revenue in FY 2001 was $2.7 billion. Seven years later, it is essentially the same. That tells me that the current trend in lagging income and sales tax revenue is likely to be the case for the next several years.
It doesn’t help that two years ago the Legislature passed a tax-swap “reform” package – Act 388 – that essentially made state tax coffers overwhelmingly dependent on the most fluctuating revenue source – sales tax.
Now state leaders in Columbia are prepping for a third round of budget cuts this month. It wouldn’t be surprising if we face a fourth before we end Q1 of 2009.
Darla Moore brings up a valid point in recommending a BRAC-style commission to reform our state’s taxing structure. Hopefully, leaders in Columbia will take her recommendations to heart and realize that piece-mealing a tax system together just won’t work.
Here’s what she had to say…